By threatening to close their Wells Fargo and U.S. Bancorp accounts this week, a group representing Somali Americans has pushed the ongoing hawala remittance issue to a head. For months now, Somalis in Minnesota have been barred from making the small regular transfers to their family members in Somalia that they have been making for years.

According to American Banker, “Bank officials say they sympathize with the plight of the expatriates but that there is no clear way to process the payments comfortably within federal rules. The problem lies in Somalia’s money-services businesses. Remittance there is done through a loose network of MSBs known as hawalas. U.S.-based hawalas work with banks to wire the money to hawalas in Somalia.” Since hawalas in Somalia are unregulated, the U.S. government worries that such intermediaries could assist in funding terrorism.

Unfortunately, it’s not an isolated incident. This scenario is likely to happen more and more as onerous Bank Secrecy and USA Patriot Acts make it increasingly difficult for financial institutions to be in full compliance with anti-money laundering regulations. Instead of trying to comply, they are electing to opt out so as not to encounter heavy federal fines. It sure would be nice if the world had a decentralized peer-to-peer digital currency that could be transferred to mobile devices in a secure fashion.

Wait a minute! Doesn’t bitcoin allow for rapid and trustworthy international value transfer? Isn’t bitcoin fairly easy to obtain in the developed economies of North America and Europe? Doesn’t Somalia have good telecommunications infrastructure supporting mobile phones?Here’s how the bitcoin money remittance process would work. A hard-working honest Somali American wishes to send the equivalent of $150 to his mother in Somalia so he purchases bitcoin at one of the many exchanges that accept cash deposits at banks for bitcoin. Alternatively, our would-be remitter could use the Bitcoin OTC (over-the-counter) exchange and arrange a person-to-person sale based on reputation history. Once the bitcoin is stored safely in the remitter’s client wallet, he would ask the overseas recipient to generate a bitcoin receiving address using one of the many bitcoin wallet apps for Android. [Sorry but Apple's App Store is currently restricting bitcoin wallet apps with send or receive capability.]

After his mother in Somalia has received and confirmed the bitcoin transaction (approximately 10 minutes), she would be able to maintain the bitcoin balance or change it out into her local currency, the Somali shilling. Bitcoin exchangers are already springing up in many countries around the world including Brazil, Latvia, and Philippines. If it hasn’t happened already, a savvy merchant in Somalia will start accepting bitcoin for Somali shillings. Or a traditional currency exchange dealer could get in on the action too — the spreads are certainly there.

In September 2010, the mobile penetration rate in Somalia was estimated at 25.84% over a population estimate of 9.9 million. Since the financial flow would be principally in U.S. dollars to bitcoin to Somali shillings, several aggregators could make a market in bitcoin and then sell their bitcoin in the market to other intermediaries. All it takes is a few Somalia-based bitcoin outlets to open up their economy to the rest of the world economy.

As a distributed network, bitcoin possesses the capability to route around interference and disruption. In fact, this was a key design consideration as resiliency has grown to become an imperative for privacy-enhancing electronic cash. Its detractors remind me of the holy papacy being fearful of the printing press because it allowed for individual interpretation and diminished mankind’s reliance on the anointed biblical teachers.